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The first section examines the distributions of employment within various areas of the US economy. The Bureau of Labor Statistics compiles employment data for various sectors of the economy. The charts in this group are all portrait, three panel charts drawn on logarithmic scales with monthly data. The first three charts compare eight categories of employment (as a percent of non-farm payroll) and the unemployment rate.
Goods Producing, Services Producing, Unemployment
Manufacturing, Construction and Wholesale & retail trade, 1939
Services, Finance, insurance & real estate and Government, 1939
|The top frame shows the percent of non-farm payroll that
is employed in the Goods producing sector of the US economy. The middle frame shows the
percent of non-farm payroll that is employed in the Services producing sector. The lower
frame shows the unemployment rate (unemployed as a percent of the civilian labor force).
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The second three charts show the annual rates of change of the same eight sectors and total employment on Comparable Growth Scale charts. Each of the lines on these three charts shows whether more or fewer people are being employed in that area of the economy. When the line is above the zero line, more people are employed in that area than at the same time last year. When the line is below the zero line, fewer people are employed in that area than at the same time last year. Because they're drawn on a Comparable Growth Scale chart, the series on each chart can be compared directly.
Goods Producing, Services Producing, Unemployment
Manufacturing, Construction and Wholesale & retail trade, 1940
Services, Finance, insurance & real estate and Government, 1940
The second section examines the baby boom in the US.
| US Population of each age in
1995, 2010, 2025 and 2050.
Each panel shows a snapshot of the age distribution of the US population for that year.
|This chart is a portrait, four-panel, chart. Each of the panels is an arithmetic scaled histogram. Each histogram draws a vertical bar for every age from 0 to 100. The height of the bar represents the number of people in the US that have attained that age. In other words the leftmost bar shows how many Americans are less than 1 year old. In the top panel, that's the number of "less than 1 year olds" in 1995. In the second panel, that's the number of "less than 1 year olds" in 2010 (using official US Census Bureau projections). The third and fourth panels depict the population distributions projected for 2025 and 2050.|
| US Population Aged 85 or
(1950 to 2050)
As the boom ages, this part of the population will triple.
|This simple line chart is a dramatic depiction of a significant message. It shows the number of people aged 85 years or more. The right edge of the boom, those 50 years old in 1995, will be 85 in 2030.|
| Area Chart of US Population
by Age Group
You can see the "bulge" created by the baby boom as it moves from one age group to the next, like a snake swallowing a large meal.
|We have divided the entire population into four groups: Those aged under 20 (roughly 29% of 1995 population), 20 to 39 years (31% of 1995 population), 40 to 64 years (28%) and those aged over 64 years (13.6%). The fraction of the population represented by each group in any year is shown as the area between the lines on this chart. The total population always adds up to 100%.|
| U.S. "Yuppie/Nerd
Ratio" overlaid on Moody's Aaa Bond Yields
(1900-2050, includes projections)
|The "Yuppie/Nerd Ratio" compares the number of 25 to 34 year olds ("Yuppies") to the number of 45 to 54 year olds ("Nerds"). Developed by Stan Salvigsen of Comstock Partners, this ratio does a good job of tracking the demographic pressures on long term interest rates. (Nerds buy bonds for retirement, Yuppies borrow to buy houses, cars, cribs, etc.)|
| Japanese "Saver/Spender
Ratio" overlaid on the inflation adjusted Nikkei 225
This ratio fits the inflation adjusted Nikkei average quite closely.
V29k9706.PDF (99kb) shows this chart along with the explanatory notes for this chart.
|The "Saver/Spender Ratio" (a variation on the "Yuppie/Nerd" ratio) divides the 40-49 year old population by the 25-34 year old population. 25-34 year olds tend to be spenders (buying houses, raising children, etc.), while 40-49 year olds tend to be savers that tend to invest aggresively in stocks. By dividing them, this ratio attempts to represent the buying pressure on stocks due to demographics. Adjusting for Japanese inflation shows the real growth in Japanese stocks.|
| US "Saver/Spender
Ratio" overlaid on the constant-dollar DJIA
This chart and the accompanying analysis in the explanatory notes discredit the demographic theory that stocks will peak in 2007.
|This chart shows the U.S. "Saver/Spender Ratio"
along with the official US Census Bureau projections to the year 2050. It applies the U.S.
version of this tool to the U.S. market, using the inflation-adjusted
DJIA. This allows you to see the effects of demographic buying pressure on real
stock prices in the U.S.
The explanatory notes for this chart examine the 1929 peak, the 1948 low, 1966 peak and 1982 low in the Constant Dollar DJIA. It discusses the likely future for U.S. stocks based on this ratio. There is a table listing the values of both the U.S. Saver/Spender Ratio and its five-year growth rate from 1995 through 2006, allowing the reader to make his own, informed decision.
The late Stan Salvigsen of Comstock Partners, Inc. developed what he called a "Yuppie/Nerd Ratio". It compared the number of 25 to 34 year olds ("Yuppies") to the number of 45 to 54 year olds ("Nerds"). Originally he developed it for bond market analysis. Charles Minter of Comstock Partners, Inc. continues to track this ratio and employ it in his analysis. While the "Yuppie/Nerd Ratio" works well for bonds, the "Saver/Spender" ratio works better for stocks. We believe that is due to the fact that 45-49 year olds ("Savers" not "Nerds") invest aggresively in stocks while 50-54 year olds ("Nerds" not "Savers") are closer to retirement and less willing to accept the risks of stocks, and more likely to buy bonds for their retirement accounts.
The "Saver/Spender Ratio" is Topline's variation on the "Yuppie/Nerd Ratio" designed to represent the buying pressure on stocks due to demographics. Because of our limited experience with this ratio, were reluctant to put too much weight on it as an indicator. That said, we have much more confidence in the "Saver/Spender Ratio" ratio than we do in the "births shifted 40 years" chart that has gotten a lot of press. Our ratio is a simple ratio. The popular chart is not simply shifting the number of births by a fixed amount. There are many "fudge factors" which we believe make it much less reliable as a forecaster. Statisticians would say that the "births shifted 40 years" model has more degrees of freedom, and consequently is more likely to be the result of a curve fit.
This volume was introduced in the March 1997 edition.